Wed, May 27, 2020
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Zook: bond investors complacency could cost them in a slowdown

Monday, February 11, 2019

Bailey McCann, Opalesque New York:

Investors started off the year by piling into BBB bonds, and they've been paid for it. Performance is up and investors are buying up new issuance. A recent Bank of America survey of fixed income managers showed that nearly 40 percent expect that the BBB category will outperform over the next 12 months. But one investor is skeptical. Opalesque caught up with Christopher Zook, Founder, Chairman and Chief Investment Officer of CAZ Investments during the Cayman Alternative Investment Summit, and he says the complacency surrounding fixed income is potentially dangerous at this point in the cycle.

BBB bonds, the lowest investment grade bonds are now a significant part of the fixed income universe. BBB bonds account for more than $2 trillion of the debt market, up from $750 billion pre-crisis. When these bonds are downgraded they fall into the high yield or junk bond market.

Investors avoided BBB bonds last year as markets feared a potential recession and worried about corporate balance sheets. But after a year in the doghouse, yields on those bonds have made them hard to pass up. According to Zook, that could be a problem. "There are enough institutions invested in this part of the market that if you start to see downgrades a lot of people are going to be forced out because of their inve......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Tiger Global tops the list US-based venture capital market[more]

    Laxman Pai, Opalesque Asia: Tiger Global Management holds on to its position as market-leader in US-based venture capital, said a study. According to Preqin, the closure of tech-focused Tiger Global Private Investment Partners XII in January means the New York-based firm has raised more than

  2. Tech: Fintech startup Brex closes $150m in pure venture funding amid recession[more]

    From Business Insider: Brex, the 3-year-old fintech unicorn, raised an additional $150 million in equity funding from existing investors and Lone Pine Capital, the company announced Tuesday. The cash infusion raised the startup's valuation to "around the $3 billion mark," cofounder and co-CEO Henriq

  3. PE/VC: Venture debt set to take prominent role, Building out Goldman Sachs's private-equity business[more]

    Venture debt set to take prominent role From PE News: Venture debt financing could be having its moment as the equity market becomes less friendly to start-ups. About $10bn worth of venture debt deals were made this year as of 21 April, a pace set to eclipse the roughly $25bn in such de

  4. Study: Emerging market bond issuers take hit as global recession deepens, The coronavirus pandemic could cost the global economy a nightmarish $82tn over 5 years, a Cambridge study warns[more]

    Emerging market bond issuers take hit as global recession deepens Increasing credit stress evident amongst many high-yield EM non-financial corporates as coronavirus disruption takes its toll, says Moody's. 74 out of 106 rated EM sovereigns have a stable outlook as of 30 April 2020 (compa

  5. Investing: Singer bets on Europe, emerging markets, Britain's unhealthy appetite for financial risk in essential services, How Stan Druckenmiller shook up his portfolio[more]

    Singer bets on Europe, emerging markets From Investment Magazine: William Blair's Brian Singer is looking to invest in Europe and the emerging markets as the recovery from the global economic shutdown to contain the pandemic will likely take longer than what the market has priced in.